Negotiations between Mayor Michael Bloomberg's administration and the United Federation of Teachers over a new evaluation system, one on which access to hundreds of millions of dollars in state and federal funding depends, have failed, the mayor and his schools chancellor just announced.

"As the hour wore thin and the night turned into early morning, the right deal was not on the table," said Dennis Walcott, the chancellor, who was negotiating at union headquarters until 3 a.m. "We were very, very close, extremely close, as far as cementing a deal. But at the same time ... new issues came up."

Today is the state-mandated deadline by which the city and union have to reach a deal if they want $250 million in state funding. Also at stake is up to $200 million in federal funding.

According to Walcott and the mayor, the negotiations broke down over two issues.

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First, the United Federation of Teachers wanted the deal to sunset in June 2015, which, according to the mayor, "would essentially render the entire agreement meaningless, and that's because the process of removing an ineffective teacher requires two years' time. ... If the agreement sunsetted in two years, the whole thing would be a joke."

Many other school districts in the state have reached agreements with their teachers that last only a year. The governor has hailed those deals as a major accomplishment.

The second obstacle, according to the mayor, was a union demand that the city double the number of arbitration hearings for people who file grievances as part of the evaluation process, which the mayor said would make it even harder to remove ineffective teachers.

The mayor said he has not been in touch with the governor's office about a possible deadline extension and has yet to figure out how he's going to make the budget whole, following the loss of an anticipated $250 million.

The teacher's union had no immediate comment, but union president Michael Mulgrew did say, according to one reporter, "I have never seen such a blatant misrepresentation of the facts."

UDPATE: Here's a statement from Mulgrew:

I am sorry to announce that I have notified Governor Cuomo and other state officials that -- despite long nights of negotiation and a willingness on the part of teachers to meet the DOE halfway – the intransigence of the Bloomberg administration on key issues has made it impossible to reach agreement on a new teacher evaluation system. It is particularly painful to make this announcement because last night our negotiators had reached agreement – but Mayor Bloomberg blew the deal up in the early hours today, and despite the involvement of state officials we could not put it back together. Thousands of parents have gotten a lesson this week, as the Mayor’s “my way or the highway” approach has left thousands of schoolchildren stranded at curbs across the city by the school bus strike. That same stubborn attitude on the Mayor’s part now means that our schools will suffer a loss of millions of dollars in state aid.